A business is an organization whose purpose is to produce goods and services to meet the needs of customers. A business might produce its own goods or buy them from a supplier and sell them to customers. The place where buyers and sellers meet to exchange goods and services is known as a market.

Before selling your goods to customers, you have to look at their needs and this can be done through market research. Market research can tell a business several things such as; what features customers want, how much they are willing to pay for it, who are their main competitors, etc There are two types of research, primary research is collecting data that did not exist before (field research) and then we have secondary research which is collecting data that already existed (desk research)

Secondary research has 2 advantages over primary research and it is that its less time consuming and offers a wide range of information, primary research though can be more accurate and up to date as well as effective for collecting qualitative data. Qualitative data is information collected from your research that is to do with opinions, judgments and attitudes. It is 1 of 2 types of data that can be collected. The other kind is Quantitative and it is to do with numbers.

When researching for their products and where they should be placed in the market, business use market mapping. Market mapping helps businesses identify market segments and position their products through identifying gaps in the market. These maps can be used to position and compare products in a market based on their similar characteristics and then identify where customer needs are not being met. These similar characteristics make the process called market segmentation and they can be anything from age, gender even income.

An example of how the market map diagram looks like:

Businesses have competition in the market amongst each other and it has to be dealt with well and the way on doing that is allowing the business to differentiate from others, basically allowing it to have something that their competition doesnt have. It can have a wider range in products, better design, better quality and even a stronger brand image. You can add value. Added Value is the increased worth that a business creates for a product. Adding value is very closely linked to profit and its a way on differentiating the business from completion. Another way which you should add to the list mentioned above is that you have a Unique Selling Point (USP).

There are several types of businesses one could deal with. One for example is a franchise; a franchise is the right given by one business to other businesses to sell goods or services using their name. In a franchise you have a franchisor and a franchisee, the franchisor is the business that gives franchisees the right to sell its product or service and the franchisee is the one that agrees to distribute the products under license by a franchisor.The franchisee gets a lot of things from buying a franchise, such as; 1- An established brand name.2- Training.3- Equipment.4- Access to goods and services.5- Advertising and promotion.6- Ongoing support.

We have enterprise, which is a word often used in business which represents the ideas and initiatives involved in starting a business. Businesses might sell a good (which is a physical/tangible object such as a car) or a service (which is an non-physical/intangible product such as insurance).

An entrepreneur is a person, who owns and runs their own business and takes risks, they start after they have the initial spark and idea to make a business and this is called an enterprise.Every entrepreneur should have enterprise skills. These skills are

To be risk taking Showing Initiative Willing to undertake a new venture

Once the entrepreneur has thought of his business idea, he has a few ways on protecting them. Protecting them is important since you wouldnt want someone to steal your idea after you worked hard on it. You have patents which is registered with the government that you have the right of ownership with your design or invention. You then also have copyrights which is the legal ownership of books, music and films which prevent these being copied by others. You then also have trademarks which is things like logos, signs and symbols for your business to be protected.

Entrepreneurs must take risks, but they should be calculated risks and this is done by comparing both upsides and downsides of what could happen.

There is something called the marketing mix, which is the 4 P principle. 1- Price 2- Place 3- Product 4-Promotion^These are things that should be looked at by businesses to help with their ideas.

You must know a few basic terms and formulas before moving on-

Revenue is the amount of income a business receives by selling goods or services over a period of time. (Total Costs + Profits = Revenue) (Price x Quantity = Revenue)

Fixed Costs: It is a cost that does not vary with the output produced by a business, e.g. salaries and business rates. Variable Costs: It is the cost that changes directly with the number of products made, e.g. raw materials and labor. (Variable Costs = Cost of 1 Unit x Quantity Produced)

(Total costs = Fixed Costs + Variable Costs)

To calculate if a business has a profit or loss you use the formula below:(Total Revenue Total Costs = Profit or Loss)

You must know what a cash flow is and how to work with one A cash flow is the money that flows into and out of a business on a day to day basis. It predicts how cash will flow through a business over time.

**PLEASE NOTE; THIS SECTION MUST BE GONE THROUGH WITH ME, HERE I AM JUST SHOWING YOU HOW A CASH FLOW LOOKS LIKE. I NEED TO SHOW YOU HOW IT WORKS IN PERSON!!!!!When business start, they start with something called a business plan. A business plan is a plan of the development of a business, giving forecasts of items such as sales, costs and cash flows. A business plan has several purposes such as;1- To convince a bank to give you a loan.2- Forecast financial projections.3- Identify the needs of customers. 4- Provide information.

More on the Marketing Mix-

Product: The product itself has to meet the needs of customers and have the correct attributes and features that the customer wants. A successful business will try to differentiate their product.

Place: The way in which a product is distributed, how it gets from the producer to the consumer. This can be online or a retail store.

Promotion: It is the communication between the business and customer that makes the customer aware of its products including; advertising, sponsorship, sales promotions and public relations.

Price: The price of the product must reflect the value customers place on the product. High-Quality products have a high price and also extra features can make the products worth more so prices can be higher.

Basically you have to sell the RIGHT product in the RIGHT place with the RIGHT promotion at the RIGHT price for a greater chance in sales.

The term liability refers to the legal responsibility a business has towards its debts.

Unlimited Liability: It is when the business is legally responsible for any debts of the business, therefore there is potential for the owner of the business to lose their personal belongings to pay off debts.

Limited Liability: Any debt incurred by the business belongs to the business and the owners can only lose up to the amount that they have invested. Their personal belongings are not liable.

Unlimited is dealt with sole traders; limited is dealt with private limited companies (Ltd).

The Difference between sole traders and Ltd.s:

Sole TradersPrivate Limited Comp.

RiskUnlimited Liability means there is more risk.Limited Liability reduces risk on owners.

ControlThe owner has 100% control of decisions. The control of the main owner will depend on the proportion of the business sold as shares to other shareholders.

ProfitsThe owner keeps 100% of the profits.Profits are shared proportionally between the shares owned by shareholders.

PrivacyThere is more privacy. Accounts are filed with Companies House and can be viewed by anyone on payment of a small fee.

When a business starts there will be certain tax issues. All business have to adhere to and every business must keep records on business activity so that government can keep track. Also to make sure everything is kept safe and legal.

What taxes do small businesses pay?

Value Added Tax (VAT): A tax on the value of sales of a business. Businesses that sell more than a certain amount will register to pay VAT. Income Tax: A tax on the income earned by workers and sole traders. National Insurance Contributions (NIC): A tax on earnings of workers and sole traders linked to state benefits. Corporation Tax: A tax paid by limited companies on the profits of the company.

Customer Satisfaction is a measure of how much a business or its products meet customers expectations. A business must have good customer service but how can they do this?

It can be done by dispatching orders quickly, offer excellent after-sales care, be convenient and polite, respond to complaints immediately.

If a business has good customer satisfaction, it can lead to repeat purchase, loyalty, and differentiation, improves reputation, and can allow a business to charge a premium price.

Repeat purchases help achieving long term sales and therefore the success for a business.

Market Demand and Supply

The price of goods and commodities change constantly. These changes in price are influenced by the relationship between supply and demand.

Supply is the amount that sellers are willing to sell at any given price, demand is the amount that buyers are willing and able to purchase at any given price.

Demand:Supply: Impact:

High Low Shortage prices rise

Low High Surplus prices fall

A market is where buyers and sellers meet to exchange products and services.

Commodity Markets are markets for raw materials, such as oil, steel and wheat, used in production of other goods.

Goods Markets are markets for everyday products such as clothes and food.

An interest rate is the percentage reward or payment over a period of time that is given to savers or paid by borrowing on loans.

When an entrepreneur starts his/her business they may not have the capital (money) to start. So they would need to borrow money, typically from a bank, and this is called a loan.

A rise in interest rates will increase the costs of borrowing:-Businesses on a variable rate may struggle to repay loans.-Small businesses are less likely to borrow money to start up or expand. -Customers are less likely to spend money as borrowed money costs more, so consumer spending falls.

A fall in interest rate will lower the costs of borrowing: -Businesses will have more money to spend and cash flow may improve.-Businesses may borrow money for a start-up or expansion. -Customers are more likely to borrow and spend their money. Customer spending rises.

What is fixed interest rates? An interest rate that does not change over the life of the loan. A business could lose out on a fixed contract if the rate falls.

What is variable interest rates? An interest rate that changes over the life of the loan. They can be more risky and hard for a business to plan against.

An exchange rate is the price of buying foreign currency.

**Please note that this is a very important section. It is not covered because it is difficult to write down and explain in words, but this will be gone through with me!

The lines below are for after we go through it together, you will explain it in your own words for yourself.

A stakeholder is an individual or group that has an interest in and is affected by the activities of a business.

Since a business can have an impact on stakeholders, they must take in their needs as consideration.

Examples of stakeholders are:Suppliers

ManagersOwners (Shareholders)

GovernmentWorkers

The local community

Competitors

Customers

Stakeholders interested in the financial success of the business will look at not just its profit but also its market share and revenue.

A sort of market research is the product trials. Product trials is when consumers buy a product for the first time to assess whether or not they want to buy it again. Now if this is successful then it would lead to repeat purchases and customer loyalty, this is when customers will buy a product more than once and keep coming back.

Examples of product trials are: Low trial prices. Advertising. Public Relations. Viral Marketing. Free Samples.

What are some methods that can be used to increase customer loyalty and chances of repeat purchases? Special Promotions. Reminder Adverts. Product Innovations. Customer Loyalty Schemes (loyalty cards).

Product Cycle:

Introduction: The product is launched/released onto the market. (Cash flow is negative money goes out not in)

Growth: If the launch is successful then sales would increase sharply and the product may make a profit for the first time. (Cash flow is positive, but small)

Maturity: Sales growth slows down, but repeat customers continue to buy and customers become loyal. The market becomes saturated as rivals bring out competing products. (Cash flow most likely to be positive)

Decline: Eventually the product is outdated and there is a big fall in sales, leading to withdrawal. (Cash flow most likely to be positive)

//Extension strategies can be a way a business can use to increase the life of its product. This involves slightly changing the product so that it has a fresh appeal to the target market or appeals to a new market segment. Examples may be, creating new packaging or adding new features

Businesses sell a range of products. Selling a range of products is called a Product Mix or Product Portfolio. New products are constantly being launched onto the market. Product portfolio analysis helps business to make decisions on lots of things such as; What products to launch and when? When to withdraw a product. How to increase sales?

The Boston Matrix is a product portfolio tool used to plan the development of products. It can closely be linked to the product life cycle.

Star: Very successful product, but growth has to be funded to keep up demand and cash flow may be a problem.

Cash Cows: Little Growth, but an established and profitable product that can support others.

Question Marks: Presents a problem should the business invest to increase sales.

Dogs: Few prospects, but should the business continue to sell it if it is profitable and it funds other products?

How can a business measure its stock?

Firstly you must know that managing stock is about managing the materials that a business holds in the most efficient and effective way. Stock can include materials waiting to be used in the production process, work in progress and some can be finished stock waiting to be delivered to customers.

The Just In Time (JIT) stock control is a stock management system where stock is delivered only when it is needed by the production system, and so no stock is kept by the business.

So now you know that a business could either hold its stock or have the option on holding little or no. Here I will tell you the benefits of each Benefits of holding little/no stock:-Cost Saving is not saving stock.-Less chances of damaged goods. -Can reduce price of production => product pricing more competitive.

Benefits of holding stock:-Businesses can meet unpredicted surges in demand.-Businesses can replace damaged goods.-A business can receive discounts for bulk buying.-Limited Problems.

There are two ways a business can achieve good quality. This is done through Quality Control and Quality Assurance.

Quality Control is seen as one part of the chain production. A quality controller will examine and/or test for quality once the product has been made.

Quality Assurance involves focusing on quality at every stage of the production process. Everyone is involved and is responsible for contributing towards the achievement of quality standards.

*Please note that the benefits are not included but should be looked at. But I will go through them with you and the lines below are for you to right them out in your own words.

What are some ways on improving both Cash Flows and Profits?

Firstly we must know that cash is important in businesses. A business can still be profitable and run of cash and if a businesss outflows are greater than its inflows then it could run out of cash and trading will cease.

You can improve yours outflows by; 1- Delaying the payment of your invoices. 2- Leasing rather than buying. 3- Reducing the orders of your stock. 3- Improving your credit terms with suppliers 5- Use cheaper supplies.

You can improve your inflows by; 1- Increasing sale revenues 2- De-stocking 3- Reducing credit terms with customers. 4- Use short term sources of finance.

*-*-*To improve profits is not easy and you should look into it more. //I will go through it with you// but know that you must increase revenue and decrease costs.

Break Even Charts

The breakeven point is the point where the business is making zero profit and zero loss.

Formulas for you to know 1) Total Revenue = Quality Sold x Average Price 2) Total Costs = Fixed Cost + Variable Cost3) Break-Even = Fixed Costs Sales Revenue/PricePer Item Variable CostPer Item 4) Price Variable Cost is called Contributions.

The margin of safety: It is the amount of output between the actual level of output where profit is being made and the break-even level of output. This is how much production could fall before the business starts to make a loss.

Break Even Analysis

This break-even analysis is a useful tool to help a business make decisions and set targets, and plan for the future. Any fall in fixed or variable costs is likely to lower the breakeven point. And an increase in price will also lower the number of units required to break even.

When would a business want to use the break even? 1- To understand the past (Were past decisions on pricing correct?)2- To set and achieve production targets. 3- To launch a new product.4- To start a new business. 5- To develop a business plan.

The organizational structure is the way in which a business is structured to achieve its objectives. This is normally through a hierarchy. A hierarchy is a structure of different levels of authority in a business organization, one on top of the other.

A business can be organized in a number of ways. 1) Product Divisions 2) Regional Divisions 3) Functional areas such as marketing or finance

Organizational Structures can be seen through organization charts.An example of an Organizational Chart

A business can be centralized and decentralized Centralized Decisions are made by senior managers (normally at head office). Decentralized Decisions are delegated to regional employees at local stores as well as branches.

Due to being an outgroup in some situations, there are then barriers to effective communication throughout the business. This can have an impact on a lot such as; the customer service, employee motivation, number of mistakes made, understanding the employees, etc Barriers of effective communication include; using inappropriate email systems, being angry or tired, cultural differences, use of jargon, etc

Most business operations will have an impact on the environment; this impact could be short term or long term. And these impacts will have to managed by the business in order to achieve long term success.

Short-term effectsLong-term effects

Traffic congestion through transport and deliveries. Climate change.

Air, noise and water pollution through manufacturing and industry.Depletion of land, food and other natural resources.

Business should recycle since this is a major help on reducing the environmental impact they are doing. Please note that the impacts done by the businesses are depending on size, so the bigger the business then the greater the impact. The consumers today are becoming much more environmentally aware and since that is happening businesses can differentiate themselves and their products by taking this simple opportunity on becoming greener.An example from the above could be a car industry provides more hybrid cars.

Many businesses would have to deal with trading internationally, but there are some economic issues that affect this international trade.First know the opportunities for countries like the UK, the opportunities they have; their costs of productions is less in developing countries, they can import cheap natural resources, increased demand from foreign countries, etc This is all good but the countries which the UK is importing from can be a threat to UK businesses since for example if UK buys cheap imports then the UK businesses may suffer since no one is dealing with them. Now the government can have a major role with a businesss international trade with another, they do this to support exports or restrict imports in order to protect their home markets. What can they do?They can use; 1- Tariffs and customs duties tax imports and make them more expensive. 2- Quotas put a limit on the number of imports. 3- An export subsidy will reduce the price of exports and encourage exporting firms. 4- Whether importing or exporting UK businesses may suffer or have a benefit from these policies.

**The EU has a bunch of laws and regulations on UK businesses and consumers; I will look at those with you in person.

The planets resources are scarce; scarce is when there is a limited amount of resources such as raw materials, fuel and time. But the problem is that people have an unlimited number of needs and wants. For example they might want a better car or a bigger house or a cleaner environment, etc Since we have this situation we will have Trade Offs and Opportunity Costs. A Trade Off is a situation that involves losing one quality or aspect of something in return for gaining another quality or aspect.An Opportunity Cost is the cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action.

I will give you a further explanation- use the lines below to write it in your own words for better understanding.

Success is not just measured by the profit a business makes. Stakeholders that are interested in the financial success of a business are likely to look at the following: Profit Revenue Market Share Social Success

This is business performance in terms of social, environmental, and ethical responsibility. Note that profit is the most common measure of success, and that revenue is the money a business gets from selling its output.A growing market share (which is the quantity sold by a business as a percentage of the sales in the market) or an increase in revenue is a sign of success.

Competitiveness and competitive advantage Competitiveness is the strength of a firms position in a market, measured by market share and probability. It reflects whether consumers are prepared to use the business over its rivals. Competitive Advantages are the advantages that firms have over their rivals. They help to win customers. These advantages need to be difficult to copy (defensible) and unique (distinctive).

NOTES